I’d complain, but who’d listen? The European Commission, that’s who. Following complaints that Denmark’s proposed market liberalization was too nice to online gaming companies, the Commission is opening a formal probe into whether the state’s taxation scheme violates EU rules by favoring online gaming sites at the expense of land-based casinos.
Denmark had proposed to tax online gaming sites under a flat rate of 20% on gross gaming revenue. While many online firms vying to enter Denmark’s new market thought this to be exorbitant, it seems the complaints that sparked the Commission’s probe may have come from land-based casinos, which face tax rates of up to 75%. The Danish liberalization, which was scheduled to take effect Jan. 1, 2011, is subject to the Commission’s prior approval.
While it is in no way prejudging the outcome of this probe, the Commission has ‘doubts’ that the tax rate differential provides online gaming firms with an unjustified competitive advantage over their brick and mortar counterparts. Nevertheless, the Commission is soliciting third parties to submit comments on the subject, in order that EU bigwigs can gain a better understanding of the market, not only in Denmark, but across Europe.